Allowance of disallowed expenditure
This query is : Resolved
26 February 2011
Hi
We are having a client operating in construction industry. Its a partnership firm. Bulk of its work will be sub contracted to the sub contractors. During the FY 2009-10 it has not deducted any tax at source from the payments made to those sub contractor expenses. Subsequently huge expenditure has been disallowed.
The assessee deducted the tax and remitted the same in Feb 2011.
Suppose the contract has been completed in FY 2009-10 itself, and the assessee has no other contracts in hand, so the income from business or profession is NIL for the FY 2010-11.
Please advice me how can i act with the dis allowance of expenditure that has been made earlier?
And the partnership firm is going to get dissolved in March.
We are having a client operating in construction industry. Its a partnership firm. Bulk of its work will be sub contracted to the sub contractors. During the FY 2009-10 it has not deducted any tax at source from the payments made to those sub contractor expenses. Subsequently huge expenditure has been disallowed.
The assessee deducted the tax and remitted the same in Feb 2011.
Suppose the contract has been completed in FY 2009-10 itself, and the assessee has no other contracts in hand, so the income from business or profession is NIL for the FY 2010-11.
Please advice me how can i act with the dis allowance of expenditure that has been made earlier?
And the partnership firm is going to get dissolved in March.
26 February 2011
1] as per details there is no income to partnership firm for 2010-11, therefore while filing return, you have to show the disallowed expenditure as allowable expenditure while filing the Return.This will result in business loss in ITR.
2]For your reference,No book entries required for this. You have to consider this adjustment while filing the ITR.
2]For your reference,No book entries required for this. You have to consider this adjustment while filing the ITR.
26 February 2011
Thanks for your advice
But in this regard i just want to know one more thing
As the partner ship got dissolved and there is no income for the FY 2010-11, the return will end up showing an unabsorbed loss to the extent of the Allowed expenditure in FY 2010-11.
But what use it will make to the assessee, he cant set off them as the firm wont continue.
To be straight, the assessee paid tax to the extent of disallowed expenditure in the FY 2009-10, if he does not have any chance of setting off the loss that occurred when the expenditure has been subsequently allowed, is there any provision for refund of the same?
To my knowledge there is none of provision like that.
If it is so please advice me how can i go further?
But in this regard i just want to know one more thing
As the partner ship got dissolved and there is no income for the FY 2010-11, the return will end up showing an unabsorbed loss to the extent of the Allowed expenditure in FY 2010-11.
But what use it will make to the assessee, he cant set off them as the firm wont continue.
To be straight, the assessee paid tax to the extent of disallowed expenditure in the FY 2009-10, if he does not have any chance of setting off the loss that occurred when the expenditure has been subsequently allowed, is there any provision for refund of the same?
To my knowledge there is none of provision like that.
If it is so please advice me how can i go further?
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